Indian (SENSEX) stocks fell for the first time in five days as some investors judged last week’s rally may have outpaced the outlook for interest rate cuts by the central bank.
The S&P BSE Sensex lost 0.4 percent to 19,608.76 at the 3:30 p.m. preliminary close in Mumbai. Volumes on the measure were 15 percent below the 30-day average. Hero Motocorp Ltd. (HMCL), India biggest motorcycle maker, fell for the first time in five days. Tata Consultancy Services Ltd. (TCS), India’s largest software services exporter, paced decline among its peers.
The Sensex jumped 4 percent last week, its steepest weekly gain since November, amid speculation the Reserve Bank of India will cut interest rates at its policy review on March 19. That pushed the gauge’s valuation to 13.8 times projected 12-month profits, compared with 13.3 times at the end of February, data compiled by Bloomberg show.
“Valuations have gone up again as expectations of a rate cut is getting built in,” Mehraboon Jamshed Irani, principal and head of private client group at Nirmal Bang Securities in Mumbai, told Bloomberg TV India today.
The Sensex fell for five straight weeks through March 1, reaching a three-month low on Feb. 28, as profits at companies from Tata Motors (TTMT) to State Bank of India trailed estimates for the December quarter and a government report showed that the pace of the economic growth in the final three months of 2012 was the weakest in almost four years.
Overseas funds bought a net $127 million worth of stocks on March 7, taking their net investment in local equities this year to $8.73 billion, a record for the period, data compiled by Bloomberg show. They bought a net $24.5 billion worth of shares last year, the most among 10 Asian markets tracked by Bloomberg.
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